David Cameron and George Osborne have demanded immediate reductions, but the government insists that acting too early would harm the recovery.

Speaking to the Evening Standard, Sir Richard said: "I believe the UK's record budget deficit does pose a serious risk to our recovery. It would be damaging if we lost the confidence of the markets through delayed action, and saw interest rates have to go up steeply."

He added: "We are going to have to cut our spending and I agree with the 20 leading economists who said we need to start this year.

"The next government, whatever party that is, must set out a plan to reduce the bulk of the deficit over a parliament by cutting wasteful spending and must not put off those tough decisions to next year.

"These factors threaten to undermine the confidence of international and UK businesses, consumers and the global financial markets. That could cost jobs and reduce investment in Britain. We must send a clear signal that we have the issues in hand and a clear strategy for UK plc."